Thursday, 3 May 2012

KLCI slips in early trade, blue chips weigh

KUALA LUMPUR (May 3): The FBM KLCI slipped in early trade on Thursday in line with the overnight retreat at Wall Street and weaker performance at global markets, on fresh concerns of a slowing economic growth on the back of a fall in employment in the US.

The FBM KCI shed 0.61 of a point to 1,581.78 at 9am, weighed by losses at blue chips including PPB, Hong Leong Bank, Genting and Sime Darby.

The S&P 500 and the Dow edged lower on Wednesday as data showed that private sector hiring fell far more than expected in April, sparking concerns that Friday's U.S. jobs report will also disappoint investors, according to Reuters.

Private employers added 119,000 jobs in April, well short of the 177,000 expected, the ADP report showed, it said.

BIMB Securities Research in a note Thursday wrote that reality finally set in as investors were reminded of the not so rosy global picture just yet.

Unemployment data both in the US and Eurozone spooked investors as many reverted to profit take, it said.

The research house said that a lower than expected employment data from the private sector in the US and a jaw dropping 10.9% unemployment rate in Eurozone indicated a long and winding road ahead.

As a result, the Dow Jones Industrial Average reacted with a 11 point decline whilst the European markets closed mostly lower, it said.

Locally, the FBM KLCI surged by almost 12 points to close at 1,582 surpassing our expectations.

“Nonetheless, we believe the market’s undercurrent remains shaky as external coupled with the GE13 factors are becoming more prominent on the downside. We may see some profit taking today with the 1,580 as the immediate support level,” it said.